On Monday this week (29th October 2018) the Chancellor, Philip Hammond, held a budget. Most of what is announced in a budget is considered by laypeople to be irrelevant so here I want to summarise the points that may actually make a difference to you and me. The personal allowance for 2019/2020 will be £12,500 meaning that is how much a person can earn before paying even a single penny in tax. Previously proposed reforms around national insurance contributions have been put on hold until at least April 2020. The current VAT registration threshold is £85,000 and this will stay as is until April 2022. This is not in line with speculation in the financial services that the threshold would be lowered to make more businesses compy with MTD (Making Tax Digital) earlier. Fuel duty is to be frozen for the ninth consecutive year. For the Income Tax Rates and Allowances that will apply from April 2019 please see our Tools and Calculators page. Share this:Click to share on Twitter (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Skype (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to email this to a friend (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on Pocket (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to print (Opens in new...

Starting up a new business, especially for the first time, is often both daunting and exciting in equal measure. You have to wear many hats as a business owner and often you will need to raise capital of some kind in order to kick-start your venture. At Tower we have seen and supported many applications for funding and in order to help others when starting out and ensure a greater chance of success, we have compiled some tips and pointers to help along your journey. Business Plan:- A business plan is essential, if you don’t have a plan, you just have an idea or a dream. No matter how good that idea is, unless you have a firm plan, ideally covering at least the first 12 months, you will struggle for any potential lenders/investors to take you seriously. There are plenty of templates available online and good resources available if you don’t know where to begin with writing one. It’s sensible to review and update your plan every year as your goals and targets change. Forecasts:- They do not need to be set in stone, however forecasting on a regular basis is important so you can stay on top of your cash flow. Cash flow really is king so it’s essential that you try and plan for any peaks or troughs, not only that but this will help you demonstrate affordability for the finance you seek. Personal Credit Profile:- A new business naturally has no trading history or financials, which is why it’s generally harder to find funding support. As a result, there is an increased focus on your...

When a business is purchasing an asset, for example a motor vehicle or piece of machinery, what are the things to consider when deciding to fund the purchase by leasing or hire purchase? This is a question we are often asked but the answer depends largely on the business, their cash flow and their long term needs. Differences The most basic difference between leasing and hire purchase is that at the end of a hire purchase agreement the business becomes the legal owner of the asset (hence “purchase” in the name). At the end of a lease the title (or ownership) remains with the leasing funder. Depreciation of a hire-purchase financed asset is written into the financial records of the business as the business will be the ultimate owner of the asset. A leased asset cannot be depreciated through the business as the business will never own the asset. A lease can have an element of maintenance written into it. An asset financed by hire purchase must be maintained by the business, not the funder. Similarities For both leasing and hire purchase, payments need to be made at regular intervals (normally monthly) to the funder. Which is best? Leasing is fairly flexible and allows the business to use the asset while it has useful life, but hand it back without having to worry about disposing of it in another way. Hire purchase means that at the end of the agreement period the business owns the asset in full and can do what it likes with it. This is in no way an exhaustive guide but aims...

Use a Professional A few weeks ago the fan in my central heating unit started to make a funny noise. Did I fix it myself with the aid of Google and a household toolbox? No, of course, I didn’t. I called in an expert who fixed it in a matter of minutes. I firmly believe that we should outsource jobs to those who are experts in them. I am no plumber and don’t attempt to be. Likewise with the finance function of a small business. The business owner may feel that they can’t afford to outsource the bookkeeping, credit control, VAT returns, payroll etc to a professional. Surely their time is too valuable to spend doing these tasks that can easily be carried out elsewhere. Although small business owners have to have at least some financial knowledge, the chances of them being fully up to date on current HMRC regulations are slim at best. I know this because I have to be up to date with them and this takes more time in Continuing Professional Development than I would really like. A typical sole trader will not have the time to read the HMRC website for fun and may only dip into it when there is a problem or a question they need to be answered. As a practising member of the Institute of Certified Bookkeepers, I am obliged to stay up to date with the rules and regulations issued by HMRC and Companies House. I am regulated and supervised by the ICB and so have knowledge and skills that no sole trader would need nor want. What is...

To any self employed person, HMRC payments on account are illogical and confusing. Here we will clarify how the system works and how to remain compliant with HMRC’s odd rules! In a nutshell, this is a basic tax calculation: Taxable income £xxxxxx Less tax free personal allowance £xxxxx Tax on income at xx% £xxxxx Tax payable for the year in question £xxxx But where it becomes more complex is if your total tax liability for one year is more than £1,000. HMRC will assume that your income for the coming year will be equivalent to the year just calculated. Therefore you need to pay one half of the total liability in advance! This is HMRC payment in advance. Let’s give a practical example or two… Example One Jane Doe earns £20,000 of profit from self employment. Taking off her personal allowance of £11,000 leaves her tax payable on £9000 at 20%, being £1800. Assuming this is her first year of trading the amount she must pay in the January following the end of the tax year is the £1800 PLUS another £900. Then in the following July she must pay another £900. This means that if her tax bill for the next year is also £1800 she will have paid it already, but will then need to pay two lots of £900 for the NEXT tax year in the following January and July. Example Two Joe Bloggs earns £13,000 of profit from self-employment. Taking off his personal allowance of £11,000 leaves £2,000 on which tax at 20% is £400. This £400 must be paid to HMRC in the January following the end of...

Well all of a sudden we are in March and the tax year is almost over! That means that people like me will be nagging people like you for your paperwork and books for the tax year so that we can finalise your accounts and/or self assessment return. The tax year finishes on 5th April 2018 and from that point self assesssment returns can be submitted at any time through to the deadline on 31st January 2019. That seems like a very long time but those weeks and months will soon fly by. If you don’t know how much tax you need to pay by the deadline you could be very unpleasantly surprised by a large tax bill. The easiest way to avoid this scenario is to get your paperwork and records to your bookkeeper or accountant as soon after the year end as possible. They can then produce your self assessment tax return and you will know, many months in advance, how much tax you have to pay (or are having refunded if applicable). Get your paperwork together while it’s fresh in your mind and it will take a huge weight off your mind when you hand it all over to a professional to deal with! Share this:Click to share on Twitter (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Skype (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to email this to a friend (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on Pocket (Opens in new window)Click...